Two sentenced on insider trading

Date: December 06 2012

Eric Johnston

A FORMER JPMorgan banker and her friend, also a banker, were given suspended sentences for insider trading.

The case, which centred on JPMorgan's role in advising on US private equity behemoth Blackstone's acquisition of Valad Property Group, also raised questions about the adequacy of the ''Chinese Walls'' policies in investment banks.

Former JPMorgan relationship services associate Elisa Maree Rietbergen and her friend, Joseph Levi, who was a partner at National Australia Bank, were both sentenced by the New South Wales District Court for their involvement in buying shares before last year's takeover of Valad. After pleading guilty to insider trading charges late last year both were sentenced on Wednesday to 18 months imprisonment but released on two years' good behaviour. Levi netted more than $24,000 in the transaction, money which he has forfeited.

In March 2011 Blackstone engaged JP Morgan to advise on and potentially underwrite its proposed acquisition of Valad Property Group, listed on the stock exchange.

The team JPMorgan assembled in Sydney was on the same floor as the commercial banking unit in which Rietbergen worked.

An agreed statement tendered to the court said Rietbergen, after overhearing conversations involving members of the JPMorgan credit team and seeing them with investment bankers on the deal team, knew JPMorgan was working on a transaction involving Valad.

This information was passed onto Levi who placed an order to buy 40,000 Valad securities on April 27, 2011.

Two days later Valad went into a trading halt before announcing the takeover plan. When trading resumed the opening price of $1.76 was a 52 per cent jump on the previous closing price.

The charge brought against Rietbergen involved giving Levi inside information she had gained at JPMorgan.